RECTIFICATION OF MISTAKES UNDER GST

[Dr. Sanjiv Agarwal]

The provision in relation to rectification of mistake are contained in section 161 of CGST Act, 2017 dealing with rectification of mistakes or errors apparent from record.

What is 'mistake apparent from record’

The phrase ‘mistake apparent from record’ has not been defined under the GST Act. It means an obvious mistake. There are detailed provisions provided for this concept under section 154 of Income Tax Act, 1961. The 'term mistake' in legal perspective can be understood to mean the following:

(a)   Misreading a clear provision is a mistake

(b)  Application of a wrong provision of Act

(c)   Applying an inapplicable provision

(d)  Overlooking a mandatory provision

(e)   Non-following of decision of jurisdictional High Court

The term ‘record’ can be understood to mean record of the case comprising the whole proceedings including documents and materials produced by the parties and taken on record by the authorities, which were available at the time of passing of order which is the subject matter of rectification proceeding.

Example:

Ram Industries had already paid a tax of INR 31.40 lakhs. Copies of payment challan of the same were submitted to assessing officer. While calculating the demand of Ram Industries, Assessing officer gave a credit of INR 29 lakhs payment. This is a mistake apparent from record and proceedings for correcting this payment from 29 lakhs to 31.40 lakhs will constitute proceedings of rectification of mistake apparent from record.

Rectification of apparent mistakes from record

Section 161 of the GST Act deals with rectification of mistake or errors apparent from record. It provides that the authority who has issued any decision, order, summon, notice or any certificate may rectify any mistake apparent from record in such documents. Such rectification by such authority can be done:

(a)   Suo-moto by such authority

(b)  On bringing to notice of such authority by GST official

(c)   On bringing to notice by the affected person.

Time limit for rectification of any mistake/error apparent from record

Rectification of any mistake/error apparent from record can be done within a period of three months of issuance of such document (any decision, order, summon, notice or any certificate) by authority.

It may be noted that a time limit of 3 months is allowed for the affected person to bring to attention any such error or mistake. This time limit does not apply to a CGST/SGST officer from bringing it to the attention to the issuing authority or for making voluntarily rectification. However, no such rectification is permitted after 6 months from the date of its issuance.

Maximum period allowed for rectification of mistake

Any rectification done as per provisions of section 161 of the GST Act can be done within maximum period of six months from the date of issue of such document.  However, this period of six months will not be applicable where the rectification is purely in the nature of correction of a clerical, arithmetical error or mistake arising from any accidental slip or omission.

Rectification effecting increase of liability of taxpayer

In cases where the result of making the correction results in increasing the liability or reducing the refund of a taxable person, It can be done only after following the principles of natural justice. Without giving notice to affected person and without giving him an opportunity of hearing, no such rectification can be effected.

Substantive rectification in document while rectifying error

While correcting any mistake under section 161, no rectification can be made in the substantive portion of the document. In the garb of correcting the mistake, the competent authority cannot change his opinion in respect of the matter already decided by him.